You said:

“what else could be the reason which pushed housing price so high over the last five years? You think people get a while lot richers in five years by salary and/or so-called investment? forget it.”

My comment on this is: From 1990 to 1998, housing price was depressed for 8 years while inflation has raised people’s income. Relative to housing, at around 1998, housing did look very cheap and affordable. In relative terms, people in 1998 was indeed a lot richer in terms of buying power than they are today in 2007. Easy credit was a helping factor, but not a dominating cause. Back in 1998 to 2000 period, even without the helping factor, I bet the housing market was ready for a boom due to this high buying power and relative cheap housing price ratio.

I agree that the housing market seems to have a regulating valve, able to detect its tolerance, will reset itself in time to avoid overheating.

Afterall, if late 80s’ economy didn’t slow down, job didn’t disappear, I bet the price might went on a little bit more, but eventually will hit a speed bump like we are hitting today. Therefore, it’s very possible that the speed bump from self-regulating mechanism had never been hit in previous cycles. Instead, a job loss always happened slightly early enough to act as a cause.

I am sorry I may have confused you. If you don’t understand my logic, it’s fine. We skip it

Housing market may want to slow down to wait for inflation to ca

I feel that housing market has a kind of a self regulating valve. China market may not have this valve. But US market definitely has this valve. When the valve detected that its internal pressure is too high or it detected that it has gone way beyond inflation ratio, it automatically stopped itself for the inflation to catch up. This slump appears to have been triggered by itself, rather than external forces. Inflation can catch in many ways: Rent increase (under way), salary increase (soon to be underway), general commodity price increase (underway). After about 8-10 years, people’s income and every price around them will rise to a level that make housing price look reasonable again, then there goes a new housing boom…